HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

R (on the application of Bushell and others (Respondents) v. Newcastle upon Tyne Licensing Justices and another (Appellants)

[2006] UKHL 7

LORD HOFFMANN

My Lords,

1. On 15 November 2002 the Newcastle City Council acquired a public house called Mim's Bar from its owners, Ultimate Leisure Group plc ("Ultimate"), for the purposes of a scheme of redevelopment, pursuant to section 227(1) of the Town and Country Planning Act 1990. Although the sale was by agreement, it was against the background of an as yet unconfirmed compulsory purchase order under section 226. The question in this appeal is whether the owners became entitled to apply for a special removal of the justices' on-licence pursuant to section 15 of the Licensing Act 1964:

"Special removals of old on-licences

(1) Where application is made for the special removal of an old on-licence from any premises in a licensing district to premises in the same district on the ground-

(a) that the premises for which the licence was granted are or are about to be pulled down or occupied under any Act for the improvement of highways, or for any other public purpose; or

(b) that the premises for which the licence was granted have been rendered unfit for use for the business carried on there under the licence by fire, tempest or other unforeseen and unavoidable calamity;

the provisions of sections 12 to 14 of this Act shall apply as they apply to a renewal, subject to the restrictions on removals imposed by Parts VI and VII of this Act and subject to subsections (3) and (4) of this section

(2) A removal to which those provisions apply as aforesaid is in this Act referred to as a special removal."

2. Ultimate applied to the transfer sessions for the licensing district of Newcastle held on 11 March 2003 for a special removal to premises called the Gresham Hotel which it had recently acquired in another part of Newcastle. The effect of the referential application of section 12 by section 15(1) meant that the grounds upon which the justices could refuse the removal were narrowly restricted. They could do so only on the grounds that the applicant was not a fit and proper person or that the premises had been ill-conducted or were structurally deficient or structurally unsuitable: see section 12(4).

3. After a lengthy adjournment for an unsuccessful challenge to their jurisdiction in judicial review proceedings before Owen J, the justices held that none of these grounds of objection had been made out and granted the application on 1 December 2003. In further judicial review proceedings brought by residents and supported by trade competitors in the area of the Gresham Hotel, Lightman J held that the justices had no jurisdiction under section 15 because, at the time the application came before the justices, the premises of Mim's Bar were not "occupied" or about to be "occupied" for a "public purpose" within the meaning of section 15(1)(a): [2004] EWHC 446 (Admin). He therefore quashed the removal and his order was affirmed by the Court of Appeal (Jacob and Maurice Kay LJJ and Sir Martin Nourse) on 24 June 2004: [2004] EWCA (Civ) 767. Ultimate now appeals to your Lordships' House.

4. Before coming to the substance of the matter, I must mention a preliminary objection which Mr Steel QC, on behalf of the respondent objectors, made to the hearing of the appeal. Since the decision of the Court of Appeal, the whole of the Licensing Act 1964 has been repealed by the Licensing Act 2003 with effect from 24 November 2005 (see section 199 and the 7th Schedule and the Licensing Act 2003 (Commencement No. 7 and Transitional Provisions) Order 2005 SI 2005 No. 3056 (C.131)). Under the transitional provisions in the 8th Schedule to the 2003 Act, the holder of an existing licence under the old Act could have applied to have it converted into a licence under the new Act. Their Lordships have heard no argument on whether Ultimate could have made such an application. Whether they had an existing licence to convert would of course have depended upon the outcome of this appeal. But no such application was made and the time for making one has now expired. So the subject-matter of the appeal, that is to say, the removed on-licence, has disappeared with the 1964 Act and no decision of the House can bring it back.

5. In these circumstances Mr Steel says that the appeal has become moot and the House should dismiss it without a hearing. But the appeal is not moot in the sense that its outcome can have no practical consequences for the parties. There remain two respects in which it may affect their rights and obligations. The first is in relation to the costs which Ultimate incurred or was ordered to pay in the hearings before Lightman J and the Court of Appeal and the costs of the appeal to this House. The second arises out of a cross-undertaking which one of the objectors, Rindberg Holding Company Ltd, gave in return for, first, an undertaking by Ultimate not to commence trading until an application for leave to apply for judicial review had been heard, and then, an order to stay the continuation of the hearing before the justices. Ultimate say that the delay caused them loss of profit and have started proceedings to enforce the cross-undertaking. But those proceedings would be doomed to failure if the House agreed that the justices had no jurisdiction under section 15 and dismissed the appeal.

6. The case therefore does not fall within the principle upon which the House has previously refused to entertain appeals when the outcome could have had no effect upon the position of the parties. For example, in Sun Life Assurance Co of Canada v Jervis [1944] AC 111, a dispute over a life insurance policy in which the insured had been successful in recovering the sum he claimed, the Court of Appeal gave the company leave to appeal upon an undertaking "to pay the costs as between solicitor and client in the House of Lords in any event and not to ask for the return of any money ordered to be paid by this order." The House declined to hear the appeal because, as Viscount Simon pointed out, neither side had any monetary interest in its outcome. It was an essential part of the reasoning of the Lord Chancellor that the terms upon which leave had been given disposed of the question of costs as well as the actual sum in dispute. Likewise in Ainsbury v Milligan [1987] 1 WLR 379, not only had the subject-matter of the dispute (a council house tenancy) ceased to exist but both parties were legally aided with nil contributions and so immune from any order as to costs.

7. But Mr Steel says that the House only gave leave to appeal because the case raised a point of general public importance and although the appeal has not become academic for the parties, the point of public importance has. If the House had known when it gave leave on 20 October 2004 that the question of the construction of section 15 of the 1964 Act would become academic, it would not have granted leave. Therefore it should not hear the appeal now.

8. Your Lordships indicated to Mr Steel in the course of argument that you did not accept the last stage in this reasoning and that you would proceed to hear the appeal. There is no rule of law or practice that the House will not proceed with an appeal because there has been a change of circumstances as a result of which the questions which remain in issue between the parties are no longer of general public importance. Unless the House has expressly restricted its leave to the particular issue, the appellant is even at liberty to abandon the point of general public importance and argue any point which is otherwise open to him but which, taken by itself, would never have justified the grant of leave: see Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] 1 WLR 3251. I would not like to exclude the possibility that the House may in its discretion decide to revoke its leave to appeal if it appears that subsequent events have made the prospective cost of the appeal disproportionate to the value or importance of the substantive question in dispute. But the grant of leave to appeal will ordinarily entitle an appellant to bring any genuine issue between the parties before the House.

9. I return therefore to the substantive appeal. The question is whether, after it acquired ownership on 15 November 2002, the Newcastle City Council was occupying the premises for a public purpose. The justices did not try to answer this question because they thought that whether the Council had gone into occupation or not, the making of the compulsory purchase order created a "special removal situation", presumably on the ground that the Council was "about to" occupy the premises for a public purpose. Lightman J said, at para 27, that this was wrong: there had to be "practical certainty and imminence of outcome" and this did not exist when the compulsory purchase order was made. The order had still to be confirmed; this would involve a public inquiry and the outcome was uncertain. He rejected an alternative argument that the Council had actually occupied the premises on the ground that it was not considered by the justices and that there was no up to date evidence of the "physical presence or degree of control" necessary to establish occupation: para 29.

10. In the Court of Appeal, Jacob LJ (who gave the principal judgment) agreed with Lightman J on both points. On the second point, he said, at para 26, that "occupied for a public purpose" does not include "mere public ownership of a vacant property".

11. As Lightman J correctly observed, there appears to have been no evidence before the justices about exactly what happened when the sale by Ultimate to the Council was completed. However, in the absence of evidence to the contrary I think that one should assume that it was an ordinary sale with vacant possession. The premises had been closed for business for the previous four months. The Council would in law have obtained possession by virtue of being given the Land Certificate and the keys or other indicia or means of control. If squatters had entered, it would have been the Council and not Ultimate who would have been entitled to bring an action for trespass. But, as the judge also said, one cannot assume that the Council actually entered upon the premises or did anything to exercise control.

12. In Madrassa Anjuman Islamia of Kholwad v Johannesburg Municipal Council [1922] 1 AC 500, 504 Viscount Cave said that "occupy" was a word of uncertain meaning, the precise meaning of which in any particular statute or document "must depend on the purpose for which, and the context in which, it is used." One must start, therefore, by inquiring into the purpose of the provisions for special removal. The grounds upon which a licensee may apply for a special removal are now set out in paragraphs (a) and (b) of section 15(1), but the language remains substantially unchanged since (at the latest) the Alehouses Act 1828 (9 Geo 4, c 61). The common element in the statutory grounds is that something outside the control of the licensee has happened (or shortly will happen) to the licensed premises which makes (or will make) it impossible for him to carry on business. As Jacob LJ put it at para 21, "some force majeure either of God or man". Thus the purpose which one derives from the context of the other grounds for special removal suggests that the section is more concerned with whether the "occupation" for public purposes is such as immediately or shortly to exclude the licensee than with whether it is immediately beneficial to the occupier. One may contrast occupation for the purposes of rating, where, in addition to legal possession, "use and enjoyment" of the hereditament is required: see Associated Cinema Properties Ltd v Hampstead Borough Council [1944] KB 412. By contrast, I consider that a public authority which obtains legal possession of licensed premises with a view to putting them to some future public use is in immediate occupation of those premises for the purposes of section 15. The possession of the authority is sufficient to exclude the licensee, who would be committing a trespass if he attempted to re-enter and carry on his business. I agree with Jacob LJ that "mere public ownership" of a vacant property is not sufficient but I think that possession is. But once one treats the Council as having gone into occupation when they took possession, then it is clear that their occupation must have been for a public purpose, namely for the implementation of the statutory scheme.

13. Mr Steel said that the grounds in section 15 should be given a narrow construction because the right to a special removal could be abused. A licensee lucky enough to have been compulsorily acquired could shift his licence to much larger premises which might not be open to objection as "structurally deficient or structurally unsuitable" but be very unsuitable on broader environmental grounds. The chronology of the acquisitions of Mim's Bar and the Gresham by Ultimate gave rise to some suspicion that the former had been bought specifically because it was likely to be subject to a compulsory purchase order and could enable Ultimate by special removal to obtain a licence for the Gresham which would otherwise have been refused. Mr Steel, who is experienced in these matters, told us that such tactics were not unusual under the 1964 Act and that there had been a market in public houses subject to compulsory purchase orders.

14. There are two difficulties about this argument. The first is that the grounds for a special removal (although the term "special removal" came later) have remained unchanged since the 1828 Act. At that time the justices had a complete discretion as to whether to grant the removal or not. So the procedure was not then open to abuse. The restriction on the grounds of refusal was first introduced by the Licensing Act 1904. But that change in the law could not have changed the meaning of occupation for a public purpose.

15. Secondly, the kind of strict construction proposed by Mr Steel and adopted by the Court of Appeal would be a very haphazard way of dealing with the mischief. As long as the acquiring authority moved quickly to use or demolish the licensed premises, the licensee would be able to remove the licence to somewhere environmentally unsuitable. This would be an irrational policy for Parliament to adopt.

16. It follows that in my opinion the conditions for a special removal were satisfied and the justices had jurisdiction to grant it. The appeal must be allowed. The interested parties, Rindberg Holding Company Limited and Peel Hotels Limited, must pay the appellants' costs here and below.

LORD SCOTT OF FOSCOTE

My Lords,

17. I have had the advantage of reading in advance the opinion of my noble and learned friend Lord Hoffmann and for the reasons he gives, with which I agree and to which there is nothing I can usefully add, I too would allow this appeal.

LORD RODGER OF EARLSFERRY

My Lords,

18. I have had the advantage of considering the speech of my noble and learned friend, Lord Hoffmann, in draft. I agree with it and, for the reasons he gives, I too would allow the appeal with costs here and below.

LORD WALKER OF GESTINGTHORPE

My Lords,

19. I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Hoffmann. I agree with his opinion and for the reasons which he gives I would allow this appeal.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,

20. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann and for the reasons he gives I too would allow the appeal and make the order which he proposes. I wish, however, to add a short judgment of my own in connection with the respondents' preliminary objection. This objection is to your Lordships hearing the appeal at all given the impossibility of the appellants ever now being able to take advantage of the disputed licence to trade at the Gresham Hotel. The appeal, say the respondents, is now moot.

21. I respectfully agree with Lord Hoffmann that a complete answer to this objection is to be found in the appellants' outstanding claim for damages (currently put at some £340,000) pursuant to the respondents' cross-undertaking given as a condition of the appellants' own undertaking and a subsequent stay order which together operated to delay any chance of opening the Gresham for licensed trading by some eight months. Admittedly success on this appeal does not guarantee success on the claim for damages; without a successful appeal, however, the Court of Appeal's judgment would stand and of itself necessarily defeat the damages claim. That seems to me sufficient justification for deciding the point at issue notwithstanding that no-one's entitlement to an on-licence can ever again depend upon the proper construction of the words "occupied . . . for the improvement of highways, or for any other public purpose" in section 15(1)(a) of the Licensing Act 1964the point of law of general public importance at issue when this House granted the appellants leave to appeal on 20 October 2004.

22. The other ground on which the appellants sought to resist the respondents' preliminary objection, however, the question of costs, seems to me altogether more difficult and it is on this issue that I wish to express certain thoughts of my own.

23. True it is that very substantial costs have already now been incurred in litigating this case in the lower courts: the combined costs of both sides in the High Court and the Court of Appeal are put at some £250,000. But nobody has suggested (nor, to my mind, could possibly suggest) that this House would ever give leave to appeal if the only reason for doing so was to determine what had become a purely academic point just so as to see whether the Court of Appeal had decided it correctly and thus made the right costs order below. That would simply not be a proper exercise of this House's jurisdiction as a second-tier appeal tribunal nor an appropriate use of your Lordships' time, put aside the expenditure of the further costs involved in litigating the issue yet again.

24. I acknowledge the point made by Lord Hoffmann at paragraph 8 of his opinion that, generally speaking, an appellant before the House is permitted to pursue his appeal even though it no longer turns on a question of general public importance but rather has become, as in Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] 1 WLR 3251, "a one-off case" for which "the House would not ordinarily have given leave to appeal" (paragraph 3 of Lord Steyn's speech at p3253). There seems to me a significant difference, however, between a case like Sirius where there remained a live issue between the parties on the outcome of which hung a substantial claim and a case such as I am envisaging where all that is at stake is past (and future) costs.

25. The only other decisions of the House which were referred to your Lordships, Sun Life Assurance Co of Canada v Jervis [1944] AC 111 and Ainsbury v Milligan [1987] 1 WLR 379, involved very different considerations. In each of those cases, as Lord Hoffmann has explained at paragraph 6 of his opinion, the outcome of the appeal could have had no effect upon the position of the partieseither as to their respective rights or, and this was critical, as to costsand were therefore in a complete sense moot. But each of them unquestionably would have involved the House deciding a substantive point so as to clarify the law for future cases: in the Sun Life case, the law concerning a large number of the appellants' other endowment policies; in Ainsbury v Milligan a question of general importance regarding housing law. That notwithstanding, the House declined to hear either appeal.

26. The situation I am presently considering is, of course, essentially the obverse of those two cases: here, unlike there, costs is the one matter which can be affected by the appeal; but here, of course, unlike there, no issue arises of any wider importance than who should pay the costs incurred at the earlier stages of the litigation.

27. In this situation I for my part would expect the House to be altogether readier to refuse to hear an appeal notwithstanding that leave had been granted than where, as in Sirius, some genuine question other than costs still divides the parties and remains at issue.

28. In the present case the appellants should surely have sought the expedition of their appeal so that, if successful, the disputed licence would have taken effect at the Gresham before lapsing by operation of law on 24 November 2005 (when the new licensing regime came into effect under the 2003 Act)preferably indeed, so that it would have been available for conversion to a premises licence under Schedule 8 to the 2003 Act, namely before the cut-off date of 6 August 2005. Once those dates had passed, however, the respondents (assuming there were no outstanding claim for damages and that the parties' previously incurred costs had been all that remained at stake between them), should have alerted the House to the essentially academic character of the point of law for which leave to appeal had originally been given and sought its dismissal on that ground. It is not, of course, necessary to reach a concluded view upon whether such an application would in fact have proved successful. For my part, however, I think I would have found it fairly compelling. And certainly the present appeal is not to be regarded as any kind of precedent for this House to decide points of law for no purpose other than to determine who should be liable for past costs.